Feds weigh in on Irving's outsourcing

OTTAWA — The more Irving Shipbuilding outsources shipbuilding work overseas, the more it is making life difficult for itself, senior government officials said Wednesday.

Defence and Public Works staff said there is a need to outsource some shipbuilding work outside Canada because the local industry isn’t qualified to do it.

“There are certain elements of advanced naval architecture and design that perhaps Canadian companies are not best suited for,” said one senior public works official.

Irving is outsourcing most of its design work on Arctic offshore patrol vessels to Denmark. But officials said Irving and Seaspan Marine of British Columbia still have industrial and regional benefit targets that require them to match the value of work done outside Canada with work back home.

“That represents a risk for those companies,” the official said.

“When they select offshore suppliers, they still have those (industrial and regional benefit) obligations and will probably have a bit more difficult time in fulfilling those obligations.”

Senior staff gathered in Hull, Que., on Wednesday to discuss shipbuilding technicalities with journalists for almost an hour. In such situations, the government’s practice is to require that staffers at the meeting not be named.

The staffers insisted the shipbuilding program is still on track and on budget, even though the design and number of ships being built has not been finalized.

The meeting came a day before the parliamentary budget officer is to deliver a report on a contract for two joint supply ships.

•The federal government says it still plans to cut steel on the Arctic offshore patrol vessels in Halifax in 2015, with deliveries starting in 2018.

•When asked whether Ottawa might opt to build 12 surface combat ships instead of the planned 15, staff said the exact number has not been finalized. They said they are determined to meet the needs of the Armed Forces within the $25-billion budget for combat vessels.

•Preliminary plans for the combat ships, which will be built in Halifax after the Arctic offshore patrol vessels are finished, began four months ago. Ottawa is considering two “quite advanced” designs for the ships, including a German design. The government says it expects to start cutting steel on the larger ships in seven years.